TAIPEI (Taiwan News) – Taipei City Councilor Lai Su-ru was freed on bail early Friday morning while President Ma Ying-jeou apologized to the nation for his confidante being accused of receiving bribes from the developers of the Taipei Twin Towers project.

During the court hearing Thursday which rejected a prosecutors’ request to keep Lai detained, she announced she was resigning from all her positions inside the ruling Kuomintang, including director of party chairman Ma’s office and member of the powerful Central Standing Committee.

Prosecutors said Friday they were going to appeal the Taipei District Court decision, which was reached after four hours of discussion with attorneys and four more hours of internal deliberation. According to prosecutors, there was still a need to keep the main suspects detained as they could make contact with other eventual accomplices.

Prosecutors said Lai was going to receive a total of NT$10 million (US$335,000) from Taipei Gateway International Development, but she only received NT$1 million before the NT$70 billion (US$2.3 billion) project collapsed last month.

The Taipei District Court freed her on bail of NT$1.2 million (US$40,000), while it set bail for Taipei Gateway backer Cheng Hung-tao at NT$300,000 (US$10,000) and for Chia Erh-ching, a project adviser and former official with the Taipei City Department of Rapid Transit Systems (DORTS), at NT$100,000 (US$3,000). The three were not allowed to contact each other, to move house or to leave the country by plane or by boat, reports said. If found guilty, Lai and Cheng could face prison sentences of at least seven years.

While not the first scandal to envelop KMT politicians over the past year, the accusations against Lai came especially hard because of her close ties to Ma, who has maintained the image of a clean politician since serving as minister of justice two decades ago. The city councilor served as attorney for the KMT in several high-profile legal cases.

The president said Friday he was shocked on hearing the allegations against Lai. He offered his apology to all members of the KMT and to the people of the country, while promising the ruling party would examine itself and draw the necessary conclusions.

The latest scandal reportedly caused KMT lawmakers to voice new doubts about the wisdom of Ma running for re-election as party chairman later this year.

Lai reportedly initially demanded NT$15 million (US$500,000) from the developers, but they bargained the payments down to NT$10 million. In return for asking questions promoting Taipei Gateway’s bid at the city council and for voting in favor, she was supposed to receive the money in three installments.

However, after she received the first amount, the developers, who were backed by Malaysian investors, failed to deposit a performance bond of NT$1.89 billion (US$63.6 million) by the February 21 deadline.

As a result, the deal did not go ahead, with Lai reportedly telling investigators she returned the first NT$1 million she had received. The city councilor described the money as a political donation, denying she had violated the law, reports said.

At the time, Lai’s alleged involvement was not yet publicly known, though the failure caused the city government serious embarrassment. As a result, DORTS Commissioner Richard Chen resigned to take political responsibility. Prosecutors investigated the deal over alleged irregularities surrounding payments by Taipei Gateway.

Another city government official, Department of Finance Commissioner Chiou Dah-jan, was still under investigation for allegedly having leaked details about the tender to Taipei Gateway, reports said.